Monday, September 10, 2012

The Answer Is Urban Consolidation – What Was The Question?

Perpetuating the Myth

The Green Party is perpetuating the claim that development beyond
Auckland’s “city limits” imposes a high cost on ratepayers. A spokesperson claims that the current Auckland
plan which allows for some new development outside the current urban area, “will cost ratepayers $42b billion to 2042,
an annual levy of $200 per ratepayer”
according to a
report in the New Zealand Herald.

But is just so happens that study on which these calculations are
based is a flawed commissioned report

"The challenge ... is
that infrastructure costs are so heavily dependent on area-specific values. For instance, road costs among different
prospective development areas may vary based on the necessity for major
arterial roads, costs for sewerage and water infrastructure could vary
immensely depending on terrain and trenching conditions, and many
infrastructure components will differ depending on the level and degree of
excess capacity” (p.4)

So why did they try to develop a generic tool for estimating
the cost of urban development in Australiancities based on a mishmash of evidence from different cities and suburbs
in Australia and the United States? And
why would anyone even contemplate applying such “findings” to Auckland with its
distinctive physical geography, so different from its Australian counterparts?

A Quick Critique

The Productivity Commission actually considered the study,
among others, in a brief review of housing costs and urban form (Appendix B of
the final
report). It noted substantive
differences in the physical and social settings behind the data assembled to
support the study’s claim to some sort of universal cost relationship between development and distance from the city centre.

And
there are glaring methodological deficiencies:

“An obvious one is
mixing discount rates (zero for infrastructure capital costs, 7% for
transport-related costs, and 3% for health and emission costs), and omitting operating
costs for some items (non-transport infrastructure) and not others (pp.
295-296)

To these flaws can be added the assumption of a cost of Aus$170/tonne for
carbon emissions when the carbon floor price set by the Australian government (of
$15) has since been rescinded
and figures at or below $10.00 may be more appropriate based on today’s European
prices. So the environmental argument is
seriously overstated.

And the analysis fails to deal with the costs of expanding
the capacity of ageing infrastructure in long-established urban areas, of
remediating services designed for far lower loadings than they are now expected
to sustain, of the health impacts of apartment living in an increasingly
brown – not green – environment, and of reductions in the physical and socialresilience of high density and often congested urban areas in the face of
possible natural disasters or infrastructure failures.

Penalising the
Household - is that Socially Sustainable, or Politically Justified?

Even if it can be proven that the balance of public benefits favours medium or high density living, is there any evidence that such savings will not be offset by the better affordability of traditional suburban housing and the benefits residents derive from living into it?

Putting aside flawed data and methodology for the moment,
the results indicate that 70% of the differences in costs between decentralised
and central locations is attributable to travel and transport. Over half of these comprise travel costs and time carried by households. If we
take these private costs out of the equation the authors' estimate of the difference between centralised and decentralised development falls by 40%.

The resulting "present cost" for the average household (whatever that might be) of A$22,000 is easily justified by savings on land and
housing in “outer” areas, the benefits households get from additional space,
greater choice over housing style, and the security and community benefits of suburban environments.

So who pays if we deny people the choice of living in medium to low density housing? Mainly new households through exclusion from household ownership, or commitment to punitive
mortgages, or through the insidious extension of housing poverty through ever higher
income brackets.

So what about the
Auckland case: where does the evidence really lie?

Surprisingly-- given the obstinacy of the planners and politicians pushing the consolidation barrow -- no-one has actually done the analysis required
to determine the relative economic benefits of different urban development paths for Auckland.

The failure of the model to demonstrate economic
differences between alternative urban forms was used to suggest that intensification imposes no additional costs than traditional decentralised
development. Of course, the converse is
true – although it has been conveniently ignored: there were no demonstrable economic
benefits from consolidation or net cost penalties to decentralisation. This suggests that it would make most sense to let the market prevail, subject to broad environmental standards and fiscal constraints.

The conclusion that consolidation was the best option for Auckland ignores other shortcomings in the model
that could tip the balance in favour of strategic
decentralisation:

The failure to actually define realistic alternatives that would clearly demonstrate economic differences;

A failure to evaluate the marginal rather than average impacts of differences in urban form;

The failure to identify the costs of implementation.

Ambiguous measurement (both omissions and double counting);

To this list we can add underestimation of the high infrastructure and
development costs associated with brownfield development and urban
consolidation. These are turning up today in high financial and
development contributions for inner city projects.

Calling for Consolidation
– a Case of Artificial Intelligence

So why is the Auckland Spatial Plan so fixated on
consolidation –despite the begrudging lip service the final version pays to
decentralisation (a small concession to market reality that appears to have upset the Green spokesperson)?

I can only think it is "artificial intelligence": if enough
people say the same thing, it must be right.
Consensus becomes an excuse for lack of evidence, critical analysis, or even common sense. Groupthink prevails,: a phenomenon defined by
psychologist Irving Janis as:

Contrary evidence is dismissed while reports favouring an emerging consensus, such as the Curtin one, obtain a
degree of currency which, while unjustified, plays into the hands of policy makers looking for easy (or ideologically comfortable) answers to
difficult problems.

And so we blunder on, potentially building our cities on myth
and misconception and reinforcing the gap betwen generations as we do it.